The Big Cover Up
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The Big Cover Up is the first in a four-part investigative series on the mindless looting of pension funds in Nigeria by public officials
A powerful and influential clique of senior public servants is trying to cover up a monumental pensions fraud running into N5 billion. The fraud was unearthed by the Pensions Reform Task Team, PRTT, set up in June 2010 to reform the pension scheme in federal establishments.
Already, the Economic and Financial Crimes Commission, EFCC, has arrested six civil servants including two directors in the office of the Head of Service of the Federation, HOSF in the alleged fraud. They include Shuaibu Sani Teidi, former director of pensions unit office of the HOSF; Phiana U. Chidi, deputy director, finance and accounts, Aliu Bello, personal assistant to Shuaibu, among others. The EFCC has recovered over N35 billion in cash and seized assets from the accused persons who are currently on trial at the Federal High Court, Abuja.
But further digging into the large scale looting of pension funds over the years threatens to consume even more senior serving and retired public servants which has led to attempts to cover it up.
Fingered in the cover up bid are several senior public servants who are believed to be trying to convince Ngozi Okonjo – Iweala, minister of finance, to disband the pension reform team which unearthed the fraud and has so far saved the nation over N120 billion that would have gone into private pockets.
The Pensions Reform Task Team, PRTT, led by Abdulrasheed Maina, discovered a N5 billion fraud at the pensions unit of the office of the Head of Service, HOSF, and over N1 billion scam at the Police pension Office, PPO, after conducting biometric verification exercises on pensioners.
However, a powerful clique of senior officials of government has rallied opposition against the task team in a bid to cover up the messy scandal in federal pension, with the ultimate aim of disbanding it.
Already, the officials have succeeded in stopping the PPTT’s audit and verification exercise at the Police Pension Office, PPO, where the team discovered that over N1 billion was stolen monthly from police pension fund. Officials of the PPO fraudulently collected N1.56 billion but paid out only N550, 000,000.00 to pensioners.
The task team also discovered a secret account containing N28 billion which it froze.
At the pensions unit of the office of the HOSF, the team discovered that officials had been collecting N5 billion fraudulently every month but paying pensioners only N825 million, creaming off a whooping N4.2 billion. The breakdown of the money collected monthly was N3.3 billion as pensions, N900 million as gratuity to dead people and N800 million arrears.
However, only N825 million of the N3.3 billion was paid to pensioners while the balance went into private pockets. Also, the N900 million collected monthly for gratuity and N800 monthly arrears were largely stolen by fraudulent public officers.
Between the PPO and the pensions unit of the office of the HOSF, the Maina – led team has saved for government over N150 billion since June 2010. The breakdown include about N34billion saved from June 2010 till date from the reduction in payments to pensioners from N5 billion to N1.65 billion; N28 billion found in a secret account at the PPO; some N35 billion discovered in accounts at the Head of Service Pensions unit and about N35 billion recovered by the EFCC in cash and assets from officials of the HOSF pension unit who are facing trial.
The task team was originally appointed in June 2010 by Steve Orosanye, then HOSF on the advice of a technical committee. It had the mandate to restructure the pension office in the HOSF’s office. However, while still carrying out this assignment, it was sent to reorganize the Police Pensions Office on June 8, 2011 by Oladapo Afolabi who had become HOSF. It was to spend three months doing its job.
However, trouble started for the task team in August 2011 just a month into its assignment after it discovered a N28 billion secret account at the Police Pensions Office. It is alleged that some officials of the federal government wanted to tamper with the money but were resisted by members of the team. At least two members of the task team alleged that a senior official of government tried to pressure them to “share” the money. The official allegedly told them to take about N600 million for the team members and hand over about N2 billion. The team members rejected the offer. A heated argument was said to have ensued after which the senior official threatened to deal a death blow to the team.
Subsequently, true to this threat, a flurry of events has occurred that have threatened the existence of the task team.
After spending only one month and reducing the monthly pensions paid to N550, 000,000.00 from N1.56 billion, Afolabi asked the task team to hands off Police pensions and appointed Kolawole Adeyemi, as director of the office. As correspondence between Afolabi, Maina, Adeyemi, the office of the Accountant General of the Federation and Okonjo – – Iweala shows, a subtle tug of war ensued for the control of the Police pensions office.
Adeyemi resumed at the Police Pensions Office on August 22, 2011 and the next day fired a letter to the banks in which the PPO had funds, intimating them of his assumption of office as the director of the Police Pension Office. In the letter to the banks, he also instructed that all transactions concerning the office’s account s must be approved by him while also directing that all mandate cards be sent to him for confirmation. The banks refused to recognize Adeyemi as a signatory because the procedure was for the sitting signatories to introduce the new signatories in case of a change.
Two weeks later, on September 7, 2011 Afolabi wrote to the banks introducing Adeyemi as the signatory to the Police Pensions Office account. For example, in a letter to the manager of Fidelity Bank, Abuja, dated September 7, 2011, Afolabi introduced Adeyemi as director of the pensions office ”in respect of the Police Pensions Office Account No. 5030024748”. The manager was requested by that letter to make Adeyemi a signatory to the account.
Two days later the Accountant General of the Federation also wrote a letter to the same bank introducing Adeyemi and three others as signatories to the account. The others are Edwin Nwokoye, Toyin Jimoh Ishola and Mike Okolo. Meanwhile Maina and his team stayed put at the Police Pension Office and insisted that they still had control of the office’s accounts.
In the confusion arising from who was in charge, Adeyemi authorised the withdrawal of N119, 979,952.85 from the office’s accounts with First Bank. The mandate claimed that the money was for the payment of supplementary salary.
On September 15, Okonjo – Iweala wrote a letter to Maina asking him to continue with the Police pensions reform. She instructed the PRTT to “continue with the restructuring of the Police Pension Office until it is fully completed”. In the same letter, the minister also directed that Maina, along with Baba Gana Kaigama, John Y. Yusuf and A.A. Magaji would be “sole signatories to all the Police Pension Accounts”.
That same day Okonjo – Iweala wrote the managers of several banks freezing the accounts of the Police pension office and intimating them that Maina, Kaigama, Yusuf and Magaji remain sole signatories to the Police pension accounts with the bank with specific warning that no transaction should be accepted without their endorsement.
Curiously, the minister reversed herself only a week later on September 22 when she wrote the Maina team to hands off the Police pensions office and brought in KPMG, a firm of auditors and tax consultants to audit the place. In the letter the minister said she had been directed by President Goodluck Jonathan to review the structure of public service pension system in Nigeria, including the work of the PRTT.
But Okonjo – Iweala is not known to have taken a similar action in any other pensions unit in the public service. Apart from that she was bringing in KPMG to undertake the same work the PRTT was saddled with but not allowed to finish.
Meanwhile, since September when the minister asked the task team to hands off the PPO there has been confusion about who is in charge. Pensioners and workers at the PPO have not been paid on time. Even more worrisome is the fate of the N28 billion discovered in a secret account.
There are fears that some unscrupulous persons might exploit the muddled up situation and dip their hands in the funds.
The PRTT has faced even stiffer opposition and frustration in carrying out its work in the HOSF’s office. A series of actions have been taken to block the team culminating last week in a meeting in the office of the minister of finance where some senior civil servants advised that the team be disbanded.
A source in the minister’s office told our reporter that the four of them, two from the office of the HOSF and one from the Police pension office and another from the Police affairs ministry complained to the minister that the team was a cog in the wheel of pension administration in Nigeria.
They allegedly accused the task team of impeding work at the Police pension office, giving as example the inability to pay pensioners on time.
If that is true it would be a last attempt to get rid of the task team as the HOSF had actually attempted in the past to disband the team. Twice within two months late last year, Sali had written to the chairman of the task team to wind down its work. However, nobody has shown up to take over from members of the task team.
A member of the team who spoke on condition of anonymity because he did not have the power to speak for the team observed that what might be the saving grace for the team is the fact that the Pensions Reform Act 2004 guarantees autonomy from the office of the HOSF.
“If not that the 2004 Act makes the pension unit autonomous, they would have found a way to disband it”, he said.
The team member also said that in a bid to frustrate the team and prevent it from doing its work, it had been starved of funds for months.
He alleged that big wigs in the civil service who benefited from the pension racket of the past which has been dismantled by the task team are the ones who have rallied forces to frustrate the team and disband it.
Those who benefited from the faulty system of the past might really have a reason to fight as the task team has introduced an automated pension management system that makes it virtually impossible for anybody to steal from pension funds.
The new integrated E – Pension Management System, EPMS, has streamlined and automated pension management to the extent that all records of pensioners and workforce related data have been consolidated on a single platform.
It provides online real time access to pensioner details as well as payment history of all benefits, gratuity, and monthly pension from year to year.
The team has already integrated the pension schemes in the PPO, office of the HOSF, State Security Service, SSS, and the Customs, Immigration and Prison Pension Office, CIPPO into the EPMS platform.
The platform is configured so that the EFCC, and the Independent Corrupt Practices and other related offenses Commission, ICPC, can access and monitor activities of the different pensions offices.
If this new platform becomes operational, it will eliminate all possibilities of manipulating the pension administration for personal gain. That may be the crux of the hard times faced by the PRTT.
In October, 2011 the House of Representatives Committee on Pensions tried to wade into the confusion in the pension scheme when it wrote the HOSF and asked him to allow the task team to carry out its reforms to a logical conclusion.
The House suggested that in fact the team be given the task of dealing with pension issues in the Nigerian Ports Authority, NPA, Power Holding Company of Nigeria, PHCN, the Nigerian Railways Corporation, NRC, and other government agencies.
However, a new twist was introduced into the intrigues to disband the task team last week when it was summoned before members of the House committee on pensions.
It was gathered that team had been dragged before the committee for disturbing a virement for the transfer of N77 million from the pensions fund of the office of the HOSF for the training of civil servant abroad.
Maina was questioned on this and other issues including why he was in control of the budget of the pensions unit of the office of the HOSF and why he recommended that the Police Pensions Office get zero allocation in this year’s budget.
Those who dragged the team before the House pensions committee include permanent secretary, establishment and records in the HOSF’s office, permanent secretary, management development office and permanent secretary, career development office.
Apparently, there had been an attempt to take N77 million from pension funds for training of civil servants, which was resisted by the task team. Interestingly, those to be trained include Afolabi who retired months ago. He is scheduled to go for training nearly five times in the year, sometimes twice in a month.
However, after listening to the task team both formally and informally, the House committee on pension backed the task team and adjourned the hearing on the matter.
Maina who originally refused to speak to icirnigeria.org eventually agreed to a brief interview last weekend. He observed that he and other members of the task team had faced threats and even official intimidation because they were trying to cleanse a corrupt system.
“Our lives have been threatened. There is nothing we have not seen. Even with our work some of our bosses decide to intimidate us”, he said. (See full chat in Interviews section)
Observing that the task team had been able to save the country over N150 billion that would have been pilfered, he added that if the team is allowed to do its work it would be able to save even more. He expressed surprise at the directive to the team to hands off the Police pension office.
”We knew we were doing the right thing for the system because we had been able to discover the excess funds. We were able to determine that excess funds were being remitted to Police pension office. So when we were asked to stop it was baffling to us”, he stated.
When contacted to speak on the team he set up and how it has fared last week, Orosanye declined to speak, saying that he was under pressure to submit the report of the committee set up by President Jonathan to reform the civil service. He directed the reporter to the head of the task team whom he said “has all the information anybody needs”.
The task team boss equally confirmed that N119 million was illegally withdrawn from the Police pension but refused to mention the perpetrators. He said, however, that the finance minister was investigating the matter.
When asked to react to some of the issues, Tope Ajakaiye, the deputy director, press in the HOSF’s office advised icirnigeria.org to write a letter requesting an interview to his boss. However, no reply has come from the letter delivered to that office on January 23, 2012.
Afolabi, in his defense said that he had not effectively resumed as the director in the PPO because of the presence of the task team. He denied ever approving or having anything to do with the withdrawal of N119 million from the Police pension fund asking for documentary proof of the allegation.
He referred to the accusation as “wild allegations” and threatened to take court action if they persisted.
Contrary to that however, documents on the transaction show that Adeyemi signed the instrument with which the money was withdrawn.